Weekend Update, September 22nd, 2025
Index, Sector, and Asset Performance
The S&P 500 and Nasdaq Composite each hit all-time highs last Monday, Thursday, and again on Friday on their way to posting weekly gains of +1.22% and +2.21%, respectively. The small-cap Russell 2000 outperformed the S&P 500, advancing +1.95%. The S&P 500 closed at 6,664. Earnings have driven most of the +14% YTD return. We expect earnings, particularly in technology, comm services, and consumer discretionary sectors, to continue to be the primary driver of equity prices in 4q25-1H26. Investor positioning adds to the upside case for stocks if the backdrop remains friendly. Despite the S&P 500 being at a record high, investor sentiment remains subdued.
Historically, post September Friday option expiration, the 2nd half of September contains two of the weakest returning weeks of the calendar year.
Post Federal Reserve cutting rates, the best performing groups were longer term growth sectors such as technology and comm services, the same groups outperforming year to date. Groups with strong unit growth continue to outperform while slower growth and defensive groups have lagged YTD.
Strategists are continuing to raise their S&P500 targets, with Goldman Sachs David Kostin moving his target to 7200 for 2026.
Economic Indicators and Earnings Commentary
The Fed cut rates by 25bps as our team expected. The Feds focus has largely shifted towards the employment side of its mandate as the risks to the labor market have grown. The median guess on Fed Funds Futures and “dot plots” now points to an additional 50 bps of cuts in 2025, which would bring the federal funds target range to 3.5%-3.75%. The Fed’s reinitiated rate-cutting cycle is expected to continue into 2026 and is anticipated to foster sustained economic expansion.
Historically, Fed rate cuts after long breaks and/or at or near all-time highs have been good for equities looking out 12 months. A weak labor market getting the Fed to cut rates helps stock valuations while reducing wage pressures for corporations is historically good for EPS. US equities historically tend to perform strongly. Even small-cap stocks which generate a high percentage of revenue from the US relative to large-cap stocks and often carry a higher proportion of floating-rate debt can benefit more directly from reduced interest rates. Historically, dividend-paying stocks can also gain favor among income-focused investors adjusting to diminished fixed income yields.
US Treasuries, particularly shorter-term rates, have generally performed well across rate-cutting cycles, rallying both before and after rate adjustments.
Earnings:
FedEx (FDX), posted revenues of $22.20B, versus the expected $21.65B, and earnings per share of $3.83, versus the expected $3.61. The $33B residential construction giant, Lennar (LEN), reported revenues of $8.81B, versus the expected $8.97B, and earnings per share of $2.29, versus the expected $2.10.
This week’s EPS reports include: Micron (MU), Autozone (AZO), KB Home (KBH), and Accenture (ACN).
Commodities and Currencies
Oil continues to do little on weak demand and OPEC continues pumping to hurt Russian economics.
The US dollar strengthened against most expectations, remaining essentially flat since Tax Day.
Gold hit new ATHs at $3700.
Bitcoin and other alt coins sold off hard over the weekend with Bitcoin back to $112k and many alt coins down -3-10%.
Oak Harvest Weekly Stock Talk
V-Bottom Recoveries, The Beat Goes On
Past performance is no guarantee of future results. Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. The preceding discussion is for informational purposes only. Investing involves risk and no reference to any security listed above should be considered a buy or sell recommendation. Advisory services are provided through Oak Harvest Investment Services, LLC, a registered investment adviser.
